Page 149 - DCOM101_FINANCIAL_ACCOUNTING_I

Unit 12: Final Accounts

Notes

Notes 1. There is no particular proforma of the Trading Account. The above
proforma given is traditional one. That is not as per law. Here the students
are advised to follow this proforma.
2. If the total of credit side is more than the total of debit side, difference is

called gross profit or vice versa gross loss.

Illustration with no Opening Stock and Closing Stock

Illustration 1: Prepare the trading account for M/s Shan & Co Ltd. for the year ended 31st Mar,
2006
Total Purchases during the year `10,000
Total Sales during the year ` 15,000
In this problem, the gross profit is simply found by deducting the sales volume from the

purchases.
Gross profit = Sales – Purchases

The first step is to open the trading account for the year ended 31st March 2006

Solution:

Trading account for the ended 31st March 2006

Dr ` ` Cr
To Purchases 10,000 To Sales 15,000
To Gross profi t c/d 5,000*
Balancing fi gure(`15,000-`10,000)
*Gross profi t `5,000 is the resultant of excess income over the expenses.
The total of the credit side is more than the debit side total of the trading account.

Illustration with Opening stock, various kinds of purchases and sales, Closing
stock

Illustration 2: From the following information, prepare the trading account for the year ended
31st March 2006.
Stock on 1st April 2005 (Opening stock) ` 4,000
Purchases
i. Cash purchases 20,000

ii. Credit purchases 50,000
Sales
i. Cash sales 20,000
ii. Credit sales 60,000
Stock on 31st March 2006 (Closing Stock) ` 6,000

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